The three taxpayers — Caterpillar, Automatic Machine Products and Navistar — were on the agenda of the Alcorn County Board of Supervisors on Monday after the three were recently notified of the mistake.
The error was found several months ago by the tax assessor’s office, and it has been the focus of much research and an attorney general’s opinion during the last few months.
“What was discovered,” said Board Attorney Bill Davis, “was that there was some inventory for a couple of companies that had been erroneously treated as exempt.”
He emphasized there was no fault on the part of the businesses.
“They paid what they were billed,” said Davis. “The error originated some time ago in the tax assessor’s office and continued over time.”
In the questions to the attorney general’s office, the county asked if it could offer any relief to the affected companies since the error is on the county’s part. The opinion informs the county that the provisions of the law regarding persons and property for which taxes were not paid “are mandatory and not discretionary.”
The law allows the county to create an assessment of the property in question and collect back taxes for up to seven years. It also calls for a penalty of 10 percent of the taxes due for each year plus interest of 6 percent per year.
Caterpillar has filed a written objection, and a decision on its assessment was continued to the next board meeting on Nov. 20, at the request of attorney John Hill, to give the company more time to respond. Caterpillar has made a public records request for documents dating back to the mid-1960s.
Automatic Machine Products also received a continuance to the next meeting. Navistar is not disputing the assessment.
The assessment for Caterpillar involves finished goods with an assessed value ranging from approximately $1.9 million in the 2011 tax year to $4.1 million in the 2015 tax year.
For Automatic Machine Products, the assessment involves finished goods with an assessed value of as much as $90,108 in the 2012 tax year. For Caterpillar and Automatic Machine Products, the assessments are for 2011 to 2017.
For Navistar, the assessment lists inventory for two tax years, 2013 and 2014, both with assessed value of $358,645.
According to information contained in the attorney general’s opinion, the error in the case of Caterpillar dates back to 1998. On the personal property rendition, where the industry listed the industrial inventory, amount of raw materials and work in progress on hand, someone in the assessor’s office, beginning in 1998, “manually struck through the amount listed for ‘finished goods’ on the rendition, making a notation that the finished goods were exempt from taxation as ‘grandfathered’ under a previous exemption. Taxes were then assessed only on the raw material and work in progress. The purported exemption for finished goods was applied to all ad valorem taxation, including school taxes.”
The county could not locate an application for an exemption for finished goods filed by the industry.
The taxpayers have the option of appealing to both the Board of Supervisors and the circuit court.